US: Federal Cuts Hit Tobacco Farmers

Source from:  GoDanRiver.com 11/27/2013

Due to cuts to the U.S. Department of Agriculture, tobacco farmers across Southside are set to lose out big time on federal payments scheduled for 2014.

The payments are part of the Tobacco Transition Payment Program, better known as the "tobacco buyout." The national program was created in 2004 to help tobacco farmers make the switch from a quota-and-price-support system of the Depression Era to the free market, and to compensate for losses they incurred during the transition.
 
Under the program, eligible tobacco growers and quota-holders would receive 10 annual payments from 2005 to 2014. But because of mandatory budget cuts to the U.S. Department of Agriculture due to "sequestration," more than 7 percent of this funding won't make it into farmers' pockets during the last year of the program.

In Virginia alone, about $50 million was scheduled to be paid out next year. Now, $3.7 million will be cut, according to the Pittsylvania County Farm Bureau.

The cuts have generated an outcry from agricultural industry leaders who claim the payments were part of a good-faith agreement that farmers entered into with the government a decade ago. The payment cuts have also received bipartisan resistance from legislators, including Democratic U.S. Sen. Tim Kaine and U.S. Rep. Robert Hurt, R-5th District. Both have both written letters urging the USDA to continue the regular payments according to the original agreement.

According to Pittsylvania County Farm Bureau President Jay Calhoun, Pittsylvania County will be "by far" the single hardest hit area of the state. He estimates more than 1,000 recipients will see their payments cut, some of them by thousands of dollars.

"[The impact] is going to be relative to what you grew or the quota you hold, but some people could really stand to be hit hard here," he said.

According to critics, the biggest problem in cutting the payments is that the funding isn't supplied by taxpayer dollars, which is what the sequester cuts are aiming to save. The payments are actually provided by $10 billion in fees assessed from tobacco manufacturers and imports, meaning they are essentially paid for by the industry itself.

"The biggest gist of the story here is that this is private money, not government money. It was paid for by the tobacco companies, and the government shouldn't have their hands on it," said Donnie Moore, treasurer of the Olde Dominion Agricultural Foundation. Moore also grows about 40 acres of tobacco on his family farm, and was supposed to receive a payment next year.

"My understanding of this is the money that's cut goes back into the general fund as a way to save money," Moore said. "So they're proposing to take private money to balance the budget, and it shows no regard or common sense."

Many farmers who still grow tobacco have already factored the funding into their 2014 budgets, while those who no longer grow the crop but still receive payments are counting on the funds to pay off debts and supplement their annual income.

Calhoun agreed that many of these people could be hit hard, but said that's not really what he's worried about most.

"Yes, this hurts us, and I feel for the people out there who this is going to hit," he said. "But the bigger issue here is that the government is taking private money and setting a precedent. Next time, it might be another agency, and who knows what that will be. They can keep doing this to private money, and that's what scares me." Enditem